August 29, 2014
A single day saw the opening of a large number of bank accounts. The government of India has come up with a scheme for the financial inclusion of 75 million families who do not have bank accounts. Yesterday, Narendra Modi, the prime minister of India, officially declared the opening of 15 million bank accounts across the country as a national-level initiative. The prime minister is looking at an employee base of 725,000 in order to reach the target of 75 million new bank accounts in the near future.
One could argue that it is not really a financial-inclusion initiative, because some of the people registered under the program might already have had bank accounts. But there is no clarity on this as of now, and the initiative is being portrayed as the government targeting the recognized unbanked population only.
Fifteen million account activations were made possible via thousands of bank-endorsed camps set up through the country. Around 600 programs and 77,852 camps were organized on the opening day of these 15 million accounts. The social-uplift program aims at bringing the poor and unbanked into the financial mainstream. Sixty-eight percent of India’s population is without a bank account.
Some additional benefits people receive under this program are a RuPay debit card (RuPay is equivalent of UnionPay in china, India's answer to MasterCard and Visa.) , $1667 in accident-insurance coverage and, if they sign up before Jan. 26, 2015, additional life-insurance coverage of $500.
Also, after the first six months of satisfactory operations, the account is eligible for $83 as an overdraft facility. Subsequently, there are plans to use these accounts to provide of micropensions. The initiative was launched simultaneously at 76 centers across the country by government officials.
Along with such initiatives, the finance ministry is bringing the National Unified USSD Platform (NUUP) into the spotlight. The platform has been jointly set up by banks and mobile companies to provide mobile banking facilities to account holders. Also, the National Payments Corporation of India is providing a platform for basic banking transactions that can be made via a phone call. Accountholders will be able to check their balance and transfer money using these methods.
The initiative also includes a future plan to provide two accounts to the 75 million identified households by August 2018. The banking sector is also looking forward to setting up an additional 50,000 business correspondents, over 7,000 branches and more than 20,000 ATMs during the initial phase of the project.